When a Nobel laureate in economics tells us the evidence is stronger than it has ever been that fiscal stimulus works and fiscal austerity only makes things worse, you'd think that everyone would sit up and listen. Instead, politicians and policymakers have ignored Paul Krugman's advice and continued down the road of austerity. In this convivial economic guide he seeks to persuade us lay people that he has the solution to our problems. Although his main focus is America, there is a whole chapter on Europe. His headline "Europe's Austerity Disaster" says it all, while "The British Experiment" is held up as a model of precisely what not to do. In Europe the "Austerians" have taken over, resulting in a sharp fiscal contraction. The plan was to inspire confidence in the markets, but the "confidence fairy", as Krugman puts it, has failed to show. Above all, politicians must resist the urge "to make the economic crisis a morality play"; too many of them want to be "the grown-ups who say no", but this, he says, is "childish and destructive".

The American economist has a plan to escape the financial crisis, and it doesn't involve austerity measures or deregulating the banks. But will policy-makers, including our coalition government, heed his advice?